DHS day care for grandchild; subject to SE?

[Ross]

My client babysit for her grand daughter and was paid over $2k from the Department of Human Services. Can I put this on line 21 of the 1040....or does she have to file a schedule C and pay SE? TIA.

[TaxLadyinPA]

It doesn't matter that it is her grandchild

Schedule C and pay the SE taxes. She can take the allowed deductions for her in home daycare.

[Bill Tubbs]

Facts and circumstances...

Is she in the business of providing day care or not?

If so, then Sch C (and deduct expenses); if not, Line 21.

[MariaR08]

changing variables a bit...

client babysits for her daughter (client "grandma" watches her grandson)
the daughter pays grandma $3k/yr

so... if client is "in the business" of providing daycare... client files Sch C and deducts expenses, such as food maybe, and has to pay SE tax...?

if client is NOT "in the business" of providing daycare and simply does it to help out her daughter ($3k/yr is not very much)... client reports the $3k on line 21 of form 1040?

So if reported on line 21 of 1040 it is all taxable income, if reported on Sch C, it is taxable income (minus expenses) - hence, lower tax liability?

~Maria

[erchess]

My Two Cents

I think that if a taxpayer watches a child for more than a few months and gets paid then they are in the business and have to use Sch C.

[rgtaxservice]

...

I remember back in the day when a grandparent would watch the grand kids for free.